brainpopfandomcom-20200223-history
Adam Smith/Transcript
Transcript Text reads: The Mysteries of Life with Tim and Moby A robot, Moby, and a boy, Tim, are on a shipping dock. They are watching a ship being unloaded. MOBY: Beep. TIM: Those are gantry cranes. They unload shipping containers from every corner of the earth. A gull flies into a shipping container with a bang. TIM: Some say they were George Lucas's inspiration for… A shipping container attached to a crane smacks into Moby's head and knocks it off. Tim catches Moby’s head in his arms. TIM: Whoa. Better keep your eyes peeled. Tim places Moby's head back on his body. He reads from a typed letter. TIM: Dear Tim and Moby, who was Adam Smith? From, Spike. An image shows a Adam Smith in profile. TIM: Adam Smith was an eighteenth-century Scottish philosopher. He wrote The Wealth of Nations, which pretty much invented the field of modern economics. Moby’s head squeaks as he moves it from side to side. TIM: Hmm. Uh, aren't you going to ask? Moby straightens his head on his shoulders. MOBY: Beep. TIM: Well, Moby, economics is the study of how people produce, buy, and sell goods and services. Goods are things you can buy, like hot dogs and MP3 players, while services are tasks that you pay people to do, like auto repair and dentistry. Images illustrate the goods and services Tim names. TIM: Anyhow, Adam Smith was born in 1723. He was an exceptional student. At the tender age of fourteen, he enrolled in college at the University of Glasgow. An image shows Smith as a young man, licking a lollipop, and standing with classmates much older than him. TIM: After a lengthy education, Smith made a living giving public lectures, and he later became a professor at Glasgow. An image shows a somewhat older Smith giving a lecture before a crowd of men and women. TIM: Like many men of his era, Adam Smith believed that scientific inquiry could provide answers to just about anything, even social problems. In fact, in his first major work, he proposed that the more freedom individuals had, the more harmonious society would be. An image shows Smith pointing at an equation on a chalkboard that reads, Individual Liberty equals Social Harmony. TIM: Smith carried this theme into his next book, An Inquiry into the Nature and Causes of the Wealth of Nations, or The Wealth of Nations, for short. An image shows Smith’s book. MOBY: Beep. TIM: At the time, European nations believed that amassing lots of gold and silver was the best way to strengthen their economies. An image shows a group of wrestlers, representing different countries, standing in a ring, surrounding a large treasure chest filled with gold and silver. The wrestlers fight over the treasure. TIM: Since these two metals are limited in supply, it followed that one country's gain was another's loss. An image shows the same group of wrestlers. Almost all of them are holding piles and bags of gold and silver. One is leaving the ring, bruised and empty-handed. TIM: So, each nation tried to make more money on exports than it spent on imports. Exports are goods sold to other countries, and imports are goods bought from other countries. Images illustrate how exports and imports work as Tim explains. TIM: To accomplish this, governments actively interfered with the economy. They supported their own nation's industries and discouraged the purchase of goods from other countries. The system was known as mercantilism. MOBY: Beep. TIM: Well, Smith wrote that wealth isn't a zero-sum game, where one country's gain is necessarily another's loss. Instead, he suggested that wealth comes from labor, not gold or silver. An image shows a shoemaker making shoes by hand. There are a few pairs of shoes on the floor next to him. TIM: If the shoemaker works harder this year than he did last year and produces more shoes, his extra labor has generated wealth. So, a country's economy can grow, through increased labor or productivity, without decreasing the wealth of its neighbors. An image shows the same craftsman. His eyes change to dollar signs as he adds to the large pile of shoes he has made. MOBY: Beep. TIM: Okay, so Smith identified three general strategies for helping economies grow. First, letting people pursue their own self-interest, or individual goals. An image shows the shoemaker standing in front of his own shoe store. Signs in the window say, Now Expanding, and, $20 a pair. TIM: It may sound selfish, but according to Smith, when individuals work to enrich themselves, they benefit society as a whole. An elderly lady approaches the shoe store. She looks at a sign in the window which reads, $20 a pair, then frowns and walks on. TIM: Smith called this the invisible hand of the marketplace, leading individuals to work for the greater good, even though their main concern is themselves. The shoemaker replaces the sign with one that reads, $15 a pair. TIM: The second strategy is division of labor. You can produce more goods when work is broken up into simple tasks. An image shows two men making shoes together. One is cutting leather, and the other is assembling the pieces into shoes. TIM: And the third is free trade. When governments stay out of the way of international trade, everyone benefits. An image shows a box labeled, imported nails. TIM: Overall, The Wealth of Nations said that a free market is preferable to an economy directed by the government. This idea became known as laissez-faire, French for, Let it be. MOBY: Beep. TIM: Well, he wasn't arguing for 100 percent free markets. Smith believed that governments have a valuable role to play in making sure that everything stays fair. MOBY: Beep. TIM: Funny you should ask. The Wealth of Nations came out in 1776, the same year that the American colonies broke away from England. Images show Smith's book and the Declaration of Independence, side-by-side. TIM: Like the American Revolution, Smith's ideas flowed from the principle of individual freedom. A diagram shows an individual person in the center. Lines connect the individual to Smith's book and the Declaration of Independence. TIM: They were quite controversial at the time. But by the late eighteen hundreds both democracy and Smith's vision of free-market capitalism had become widely accepted. And more than 200 years later, The Wealth of Nations is essential reading for any student of economics. An image shows a college professor teaching Adam Smith's economic principles to a class. TIM: For writing the first systematic, scientific study in the field, Smith is now known as the Father of Modern Economics. An image shows an elderly Adam Smith. TIM: He died in 1790. Moby and Tim are walking through the shipyard. They stop at a shipping container. TIM: So this is your big shipment, huh? Moby opens the shipping container and goes inside. A moment later, he emerges with a big box of eyeglasses in the shape of the year 2008. MOBY: Beep. TIM: A…a million pairs? Hmm, yeah, you'll make a killing on those.Category:BrainPOP Transcripts